No Time To Die Chasing Market Moves

2021-10-08

Simpler’s traders aren’t looking for this dangerous market to hit new highs any time soon, but they aren’t calling it quits, either.

An erratic market environment means traders need a steady focus and strong fundamentals — even more so than usual.

The Dollar Index is rising as it responds to fiscal tightening. If the dollar goes higher this could spell bad news for stocks. And, right now the dollar appears very bullish.

The market is experiencing tapering of free-flowing cash, a strong dollar, and strong technicals. Tapering in the market — a tactic by the Fed — to curb inflation reduces cash flow to the economy.

To get a feel for market direction, consider looking for opportunities for squeezes in the three-day charts and, right now, anticipate market moves to the downside following another market rally.

Non-farm payroll numbers were released Friday at a wildly lower number than investors had expected. The market reacted by holding its own, but will this favorable response from stocks and bond prices last through the weekend?

As traders look for stock prices to go lower, out-of-the money put-credit spreads placed a few weeks out can be cheap — and that is a focus for trades in this erratic movement.

Simpler’s traders are watching for opportunities in companies that aren’t market-sensitive. This is a time to consider taking a hard look at the short side of trades, even though some stocks are showing strength.

Also, investors do well to look for non-debt technical stocks. Remember, a pattern is a pattern, regardless of the company. And, some stocks are still acting great.

Since the indexes are starting to look almost bearish, index-related short setups may be there for opportunistic traders. Watching the response to market conditions by large technical companies makes sense at this point.

There are signals that stock prices, in general, are moving back to the mean. Market indicators are hinting at opportunities for shorts, but there are no overwhelming signals to rush into any new positions.

This is no time to die chasing entries in a market that can shift suddenly.